Centrica H1 Profit Down 96%, But Revenue Rises

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ELECTRICITY British Gas has said it will hit customers with a sharp rise in electric bills

Juana Turner
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02 August, 2017, 00:42

British Gas has announced a 12.5 per cent increase to its electricity prices from next month, laying much of the blame on rising policy costs including subsidies for renewables, social levies, and the smart meter rollout.

The rise was also announced alongside half-year results from British Gas owner Centrica revealing earnings from its consumer business plunged by more than a quarter after it lost 377,000 United Kingdom customer accounts in the first half.

Underlying operating profits from its United Kingdom home energy supply arm tumbled 26% to £381 million as the group said it was also hit by warmer than normal temperatures and the pre-payment tariff cap.

In response, the government said its policy costs "could not explain" these rises by British Gas.

Head of Research for consumer collective the Big Deal, Ed Molyneux, said the information on the British Gas website had let the cat out of the bag on a price rise.

Shares rose 2.6% on the news.

"These include phasing out the standard variable tariff and levelling the playing field so all suppliers pay a share of energy policy obligations".

Details of the change in tariff came as Centrica revealed British Gas lost 377,000 United Kingdom customer accounts in the first half of 2017.

Co-founder Will Hodson said: "British Gas announcing a price rise as they make half a billion in profit is the ultimate slap in the face for families".

British Gas has ended its self-imposed moratorium on raising energy prices and announced a hefty 12.5 per cent increase in electricity prices from mid-September.

"It clearly is not sustainable as far as customers are concerned being on mainly these standard variable tariffs, which land the greatest cost on the customers who can least bear it on a regular basis".

The Department for Business, Energy and Industrial Strategy (BEIS) raised concerns over the energy giant's price rise and called for "rapid progress" on regulator Ofgem's plans for reform.

Centrica said it is on track to achieve its annual targets set out at the 2016 preliminary results published in February.

The company said it booked net exceptional charges in the first half of 2017 amounting to GBP268.0 million and GBP176.0 million worth of losses from certain re-measurements, compared to the year before when exceptional items only totalled GBP63.0 million and re-measurements generated a GBP704.0 million net gain. As these costs increase, large firms argue, that creates a market distortion. Bottom line? The move will affect over 3 million customers and add around £76 to the average dual fuel bill.

The increase in the price of electricity is the first since November 2013.

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